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of <h1>Court Partially Dismisses Tax Appeal, Addresses Key Deduction Issues</h1> <h3>THE COMMISSIONER OF INCOME TAX-6, MUMBAI Versus M/s HINDALCO INDUSTRIES LTD</h3> THE COMMISSIONER OF INCOME TAX-6, MUMBAI Versus M/s HINDALCO INDUSTRIES LTD - TMI Issues:1. Appeal under section 260(A) of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal.2. Questions of law related to deduction under section 80HHC(3) of the Income Tax Act.3. Exclusion of turnover attributable to local sales for the purpose of deduction.4. Allocation of interest to dividend income for deduction under Section 80-M.5. Payment for financial advisory services and due diligence considered as business expenditure.6. Claim of exemption of interest received from DHIL under Section 10(23G) of the Act.7. Allowance of charges incurred for depository services and dematerialization of share certificates as business expenditure.Analysis:1. The appeal was admitted on substantial questions of law related to deduction under section 80HHC(3) of the Income Tax Act for the assessment year 2003-2004. The Court dismissed the appeal concerning certain questions while admitting others for consideration. The judgment was based on a previous order in a related case.2. The Court considered the issue of excluding turnover attributable to local sales for the purpose of deduction under section 80HHC(3) of the Income Tax Act. The appeal was dismissed in part, and the Court reframed one of the questions for further consideration.3. The Court addressed the allocation of interest to dividend income for deduction under Section 80-M. The appellate authorities found no substantial question of law in this regard, as there was no connection between the interest earned from dividends and the funds used for investments.4. Regarding the payment for financial advisory services and due diligence, the Court found that the expenses were closely related to the business activities of the respondent and thus allowed as a business expenditure. The decision was based on the facts of the case.5. The Court analyzed the claim of exemption of interest received from DHIL under Section 10(23G) of the Act. The respondent had received interest from a subsidiary and paid interest for a different transaction. The Court upheld the exemption without adjusting the interest paid by the respondent.6. The Court examined the allowance of charges incurred for depository services and dematerialization of share certificates as business expenditure. The expenses were considered allowable as normal business expenditure, as they did not result in a qualitative or quantitative enhancement of the respondent's assets but facilitated compliance with regulations and dividend earnings.This comprehensive analysis covers the various issues addressed in the legal judgment delivered by the Bombay High Court.
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